Question
Orange Company produces E-Reader. The following cost information from last year is available: Fixed cost $6 per unit Variable cost $45 per unit Selling price
Orange Company produces E-Reader. The following cost information from last year is available:
Fixed cost $6 per unit
Variable cost $45 per unit
Selling price $60 per unit
Units sold 20,000 units
The company is considering a higher resolution of display. The use of higher resolution display would result in the following:
Increase in variable cost $3 per unit
Elimination of one quality inspector whose annual salary is $39,000
Annual sales in units will increase to 24,000 units
If the company uses the higher resolution display this year, what is the impact on its break-even point in unit sales? (Round the answer to the nearest unit.)
A. Break-even point in unit sales will decrease by 2,000 units
B. Break-even point in unit sales will decrease by 2,600 units
C. Break-even point in unit sales will decrease by 1,250 units
D. Break-even point in unit sales will decrease by 4,400 units
E. Break-even point in unit sales will increase by 6,750 units
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